If the Bank Can Originate and Securitize This Amount of Mortgages

question 34

Multiple Choice

If the bank can originate and securitize this amount of mortgages with the same terms four times over the next year (including the existing mortgages) and the bank earns a servicing fee each month equal to 3.5% of the monthly payments, what will be the bank's monthly fee income 12 months from now?

• A) $110,456
• B) $116,432
• C) $122,673
• D) $129,301
• E) $133,444 4 x 923,576 x 0.035 = $129,301

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Definitions:

Operating Expense

Costs associated with the day-to-day operations of a business, such as rent, utilities, and payroll.

Intangible Asset

An asset that lacks physical substance, such as patents, trademarks, and copyrights, offering long-term value to the owning entity.

Legal Costs

Expenses associated with the legal process, including attorney fees, court fees, and other expenditures related to legal proceedings or obtaining legal advice.

Depletion Entry

An accounting entry used to allocate the cost of extracting natural resources, such as timber or minerals, from the Earth over the period they are consumed.